Startup Series: Climate Robotics
Today’s guest is Jason Aramburu, CEO and co-founder of Climate Robotics.
Earth’s soils have the capacity to absorb significant amounts of carbon dioxide. To harness this natural resource, Climate Robotics is using existing technologies and converting crop residue into biochar before sequestering it deep in the ground for thousands of years. The company uses advanced robotics and artificial intelligence (AI) to accelerate and automate this process. The end result allows farmers to turn waste on their fields into carbon sinks while improving the health of their soils. Jason has an extensive career focused in leveraging technology for improving agricultural productivity. His background spans from smart irrigation and soil sensoring to agricultural technology and robotics.
Cody and Jason have a great discussion about Jason’s background, biochar's origins as an indigenous practice dating back millennia, the chemistry of biochar, the Climate Robotics solution and his company's business model. As one of the most peer-reviewed CDR technologies, biochar is poised to make a substantial impact in carbon sequestration.
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Episode recorded on August 12, 2022.
In today's episode, we cover:
[2:11] Jason's background and how he got involved in carbon sequestration
[3:15] History of biochar as an indigenous practice
[7:55] Origins of Climate Robotics
[11:55] An overview of biochar
[20:52] Biochar and enhanced rock weathering
[24:02] History of biochar in the U.S, how it's being used today and challenges
[28:36] What Climate Robotics is building
[32:25] How automation fits into the company's technology
[36:15] The company's business model
[43:45] Carbon credits and cost relative to other sequestration methods
[48:10] Funding to date and future plans
[50:04] Patents and how Jason protect's the company's technology
[53:06] Biochar's permanence and scalability
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Jason Jacobs (00:01):
Hello everyone. This is Jason Jacobs.
Cody Simms (00:04):
And I'm Cody Simms.
Jason Jacobs (00:05):
And welcome to My Climate Journey. This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:15):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help.
Jason Jacobs (00:26):
We appreciate you tuning in, sharing this episode, and if you feel like it, leaving us a review to help more people find out about us so they can figure out where they fit in addressing the problem of climate change.
Cody Simms (00:40):
Today's guest is Jason Aramburu, CEO and co-founder of Climate Robotics, which makes infield agricultural machinery that converts crop residue to biochar and sequesters it in the soil. I was looking forward to today's conversation with Jason because I've been wanting to learn more about biochar, and Climate Robotics is building a distributed biochar production system. I'm a big fan of distributed systems in general, and it's clear to me that our industrial agricultural practices are in need of change in terms of becoming more regenerative. So I was interested to learn more about how Climate Robotics is enabling farmers to use the waste that's on their fields and turn it into a carbon sink, while improving the quality of their topsoil in the process. Jason and I have a nice conversation about his background, biochar's origins as an indigenous practice dating back millennia, the chemistry of biochar, the Climate Robotics solution and his company's business model. Jason, welcome to the show.
Jason Aramburu (01:38):
Thank you. Happy to be here.
Cody Simms (01:40):
Well, I am so excited to have this conversation with you today for a few reasons. One, I'm excited to learn more about biochar as a climate solution, and two, am interested in understanding how farmers and the agriculture industry in general are working to adopt new technologies and what that looks like. So maybe before we jump into all of that, tell us a little bit about you. How did you come to start to work on the problem of creating new soil for the future of how we grow crops?
Jason Aramburu (02:11):
Oh, sure. Well, my academic background is really in ecology and environmental science. I studied at Princeton and I studied with a fellow named Steve Pacala, a professor at Princeton who is really active in carbon sequestration. He was one of the first university level folks to really get into carbon capture and storage. He's also an ecologist and a field scientist by background, and so a lot of his research also spans nutrient cycling and carbon sequestration in the field. And a lot of his work really inspired me and he produced a paper when I was at Princeton called the carbon wedges that showed really of our annual emissions as a species, how you could divide it into individual wedges of, I think about a gigaton in size and knock those out with either new or existing technology. And I felt like it really catalyzed the problem. And I saw clearly how big of an impact agriculture made of that segment.
Jason Aramburu (03:15):
And then fast forward, I was doing thesis research down at the Smithsonian Tropical Research Institute in Panama. And I was in the field researching nutrient cycling actually in the rainforest and that's where I first learned about biochar. Biochar production, it's actually an indigenous practice that farmers in the Amazon have been doing for thousands of years. And there's actually traditions of it outside the Amazon as well, in Asia, many different regions. Places where farmers struggle with soil acidity and nutrient retention, you often see an indigenous practice of burying charcoal in the soil because they various astutely realized it helped the soil to retain nutrients. It made the crops hardier healthier and grow bigger. And so I thought this was really fascinating purely from the agronomic perspective. It was a very cheap way to increase the nutrient holding capacity of the soil.
Jason Aramburu (04:11):
And as I started digging in deeper, I learned that it was also being investigated as a carbon sequestration tool. The theory being well, if indigenous people in the Amazon did this 2,000 years ago, and you can go and see the charcoal in the ground today, and you can actually measure the decomposition today, that means that the carbon stored in that biochar is still there even millennia later. And I thought that was very compelling and I realized this was something I really wanted to dedicate my life to. And I first started actually working with farmers over in East Africa. I got a grant from the Bill and Melinda Gates Foundation to test small scale biochar production with smallholder farmers in East Africa. And these were farmers mainly growing corn and sugar cane. And we got tremendous results by producing biochar from residues that they were generating in field and combining it with either the chemical fertilizers they were already using or organic alternatives. In many cases, we were seeing a two X or greater increase in crop yield in those regions. And I would say at that point I was really convinced of the agronomic impact of biochar and the potential for it all over the world.
Cody Simms (05:25):
And then I think you have some other things that you worked on, you went and built a company in smart irrigation that went through Y Combinator. You ended up as running venture capital for a Chinese search engine, as far as I understand. Maybe help us understand then how you ended up ultimately building Climate Robotics today.
Jason Aramburu (05:43):
Yeah, well, I have had a pretty extensive career in a lot of different fields. I've always really been interested in leveraging technology for improving agricultural productivity. And most of my work has really centered on that field. So yes, I've worked in the soil sensor space. I have worked also in the venture capital side, looking at different applications of agricultural technology and robotics. I did work for Baidu, which is actually the largest robotics company in the world by dollars invested and by progress. And I've always been interested in how we can use technology to improve agriculture. I like to straddle the line often between venture and operating as well. I think having that perspective of both sides has proven to be really valuable and understanding the dynamic. I think a lot of great VCs are also operators. A lot aren't as well, but I think it's great to have that perspective.
Jason Aramburu (06:42):
But in terms of how I came to start Climate Robotics. So I was lucky early in my career to connect with a very visionary scientist, Dr. James Lovelock, who recently passed away. And he was one of the first people to posit that biochar could be a climate or carbon sequestration tool. He was actually one of the first people to popularize this concept. And in many ways his ideas were incredibly ahead of their time. I mean, people dismissed his ideas and many of them turned out to be absolutely spot on correct. And I was talking to him and we were talking about biochar and we had a conversation and we both agreed, well, to really make an impact, we have to get this into row crops, corn, wheat, beans, cotton, rice, because those represent multiple orders of magnitude of scale greater than value added crops. And the reality is today, most biochar application it's in very expensive, high value crops, trees, nuts, fruits, and vegetables, and that represents maybe 1 or $2 billion market cap. Row crops in the US are a trillion dollar market cap. And so we were thinking, hey, really for this to work, it has to get into row crops.
Jason Aramburu (07:55):
And the reality is that traditional approaches are far too expensive. A corn farmer often has 10 or $20 per acre margins. There's no way they can afford biochar at 600 or $1,000 a ton. And Dr. Lovelock, his comment was well, the problem is the production approach. These systems, I believe his words were, they need to operate more like grazers. They need to operate like whales or livestock, which is minimizing the cost of harvesting, processing the material in field into the end product. And that comment resonated me. I mean, this was probably 10 or 12 years ago that I was talking to him and that comment always resonated with me because it just made so much intuitive sense. Why would you build a large plant to mass produce carbon sequestration? I mean, it never really made sense to me. The embodied carbon is huge. The logistics and the supply chain are huge. To me, that mentality always felt like the same mentality that has gotten us into this problem of let's just build it bigger. Let's just build it bigger and bigger and who cares what the impacts are. And that comment really stuck with me.
Jason Aramburu (09:08):
I had always wanted to find a way to actually realize that concept. And it was probably three years ago or so I was having a beer with my good friend, Morgan Williams, and Morgan has been in the biochar sector about as long as I have. We originally met probably 15 years ago at a biochar conference or environmental conference. And he started one of the largest producers of biochar and biochar production equipment for the lumber industry, Biochar Solutions. He's got his PhD in soil science from Berkeley. He actually wrote, or co-wrote the standard for grading biochar. And we were having a beer one night and talking about this idea like, why are we still making biochar in these plants? Why isn't it in use everywhere? And we came to the conclusion that it was true, the capital cost of financing these plants is massive and that bleeds into your per unit cost. And the cost of transporting feed stock is massive and that bleeds into your cost. And then also the labor costs required are huge.
Jason Aramburu (10:16):
And at the time I was seeing firsthand how robotics were being used to reduce labor costs in the ag industry already. And I said, well, how can we address this? Could we really build this vision of the grazer, of a system that could actually produce biochar in the field, just like a tiller or a combine harvester. And I think that idea immediately resonated with both of us, and we've been collaborators a long time. We have very complementary skill sets and we decided, hey, let's start building something. And so we started building prototypes, small scale prototypes in my backyard. I think we're both very applied thinkers. We like to build and create. We started building prototypes of the system and realized the economics worked very well. If we could crack it and if we could get it to a scale, the minimum viable scale for commercial agriculture, we could in fact, produce high quality biochar cheaper than anybody else. And that was really how we started the company. And that was probably three years ago and we've just really made tremendous progress since then.
Cody Simms (11:23):
The grazer inspiration is fascinating. More and more climate solutions that I learn about really are inspired via biomimicry, looking at how nature works today and trying to replicate it through technology in some way-
Jason Aramburu (11:38):
Absolutely.
Cody Simms (11:38):
... as opposed to just trying to industrialize. So let's maybe take a step back and just have you describe what is biochar? What is the product? Not the product of your company, but what is biochar as a product? What is the chemistry that it represents and how does it work?
Jason Aramburu (11:55):
So at its core, biochar is a very pure form of pyrogenic carbon. So charcoal, as you would find in your barbecue grill, that is also a form of pyrogenic carbon. Pyrogenic carbon occurs when we have oxygen-starved combustion. So if you light a campfire, for instance, the flame in the campfire, it's not the burning of the wood. What's actually happening is you are converting the wood into char. And in that process, you release a gas, a combustible gas called pyrolysis gas. That's what actually creates the flame of a campfire. And then over time, as your wood converts to char, then that burns into ash because it's an open flame, it's not oxygen starved. But to make char, to make pyrogenic carbon to make biochar, fundamentally what we do is we heat biomass to very high temperatures, anywhere from 500 to 1,000 or more degrees centigrade.
Cody Simms (12:51):
Biomass meaning crop residue, corn husks, stalks and stems, leaves, et cetera.
Jason Aramburu (12:56):
Exactly, exactly. Anything you can grow is considered biomass. So any plant material. We heat it to very high temperatures and it degrades into this very pure form of carbon. And it turns out you can optimize this process by restricting the oxygen, by controlling the temperature and how quickly you ramp to that temperature, you can optimize to produce a very pure form of mineral carbon. And in fact, you can produce something that's almost similar to a graphite.
Jason Aramburu (13:24):
And so the core idea, I guess the way that biochar sequesters carbon, as these plants grow, as they create the biomass, they're sucking CO2 out of the atmosphere and they're turning that atmosphere carbon into biological carbon, the biomass. Now normally, on a farm, that material degrades. Either it's left in the field, it decomposes, or it gets burned, but in one or two years, about 99% of that carbon goes back into the atmosphere. And so the concept with biochar is you take that material, you convert it into this char and you actually bury it in the soil. And what we find is by converting it into this mineral form of carbon, it's very hard for microbes in the soil to decompose that material, to break it down. And so we can actually extend the decomposition timeline of that material by hundreds or even thousands of years, depending on the conditions that you use to produce it. So at its core, biochar, it's a pyrogenic carbon. It is not charcoal. Charcoal and biochar are all forms of pyrogenic carbon. Charcoal is arguably less refined, a less cooked form of pyrogenic carbon. So biochar, it's fundamentally mineral carbon.
Cody Simms (14:41):
And in agricultural purposes, then it serves as a soil amendment. You wouldn't want to grow crops in pure biochar, because again, you said microbes basically can't work in a biochar heavily laden soil. So it needs to be mixed in with existing soil is what I heard you say. And then I also heard you say that it can help reduce soil acidity. So presumably because it's carbon, it's heavily basic and it balances out the pH of an acidic soil. So thus can be used instead of, I guess, most farmers today are dropping lime on their soil. So it can be used as an alternative to lime in terms of enabling healthy soils.
Jason Aramburu (15:21):
That's right. Yeah. So to be clear, it's a soil amendment and that's different from a fertilizer. A fertilizer is a direct nutrient that plants absorb in the soil. An amendment is something that actually improves the health of the soil and the improves the performance of the soil. So they're very different. They are both integral parts of commercial agriculture. So there's a variety of chemical soil amendments that are used in ag. Lime, as you've noted is probably the most common. There are other amendments like peat, vermiculite that also have other applications in agriculture. But yes, you're right, lime is used to raise the pH of agricultural soil. So in the Southern half of the United States, for instance, farmers generally look to raise the pH of their soil by about a quarter point. So we'll see applications of one ton of lime per acre is common. There's a pretty high variance there. If you go down to say Brazil, where we have very acidic soil, farmers are using eight tons or more per acre of lime. So quite a bit of variance.
Jason Aramburu (16:25):
But yes, biochar has a number of agronomic properties that make it very attractive for farming. So number one, it is basic and that's really due to, there's actually four chemical factors that influence the pH of the biochar. But the most important is in the pyrolysis process, you form carbonates on the surface of the biochar. So effectively it's the same impact as lime. It increases the pH of soil.
Jason Aramburu (16:51):
Biochar also has several other agronomic benefits that are really critical. It's so absorbent, I think a gram of biochar has something like the surface area of a single family home. So it's very absorbent. When you apply it to the soil, it increases the soil's nutrient retention and water retention. So that means you make inputs to your agriculture more effective. So you can use less water, you can maximize the efficiency and the utility of your fertilizer.
Jason Aramburu (17:23):
There are other benefits of biochar, it increases what's called cation exchange capacity in the soil. So it makes it easier for plants to uptake nutrients and it also reduces the bulk density of the soil, which helps to fight erosion. So really multifaceted, but probably the biggest impact agronomically and the most immediate is the liming benefit of biochar.
Cody Simms (17:48):
And one of the things I hear repeatedly is that we're at risk of top soil, at least in the US, only having so many cycles left, just due to the abundance of chemical fertilizer that we're placing on our soils today and our general industrial agricultural practices around how we [inaudible 00:18:06]-
Jason Aramburu (18:05):
Absolutely.
Cody Simms (18:06):
How does this play with that as well?
Jason Aramburu (18:09):
Well yeah, our practices for the past 50 to 100 years, they have not been regenerative. I mean, they really have negatively impacted the soil. So we are seeing top soil loss in the Midwest. One thing that is concerning is traditionally, geologically, we have acidic soils in the Southern half of the US. In the Pacific Northwest, for instance, we actually have basic soils. The Midwest was traditionally neutral. I mean, this is the best soil in the world, but what we have seen over the past 10 to 20 years is virtually every ag extension in the Midwest now recommends a liming protocol. And I mean, you can deny the evidence, if you want, you can deny what's right in front of you, but it is clear, we're seeing top soil loss and acidification in the Midwest.
Jason Aramburu (18:54):
And to me, that's a big problem. I mean, we are very fortunate that we have the best soils in the world by far. That's an asset we need to protect. Fundamentally, it's a security issue. And so yeah, we are seeing virtually every ag extension in the Midwest is recommending liming protocols now, because that's what we're seeing. And in a place like China, for instance, where I've done a lot of work as well, virtually a hundred percent of their agricultural soils are acidic now, and that's entirely due to practices. It's not based on geology. So it is a big problem.
Jason Aramburu (19:27):
And what's really cool about biochar is this is actually how we built the soils of the Great Plains that we leverage today for our agricultural productivity. These were built by millennia of grassland fires. These are fundamentally native prairies, native grasslands, and traditionally they would burn. Over every year, the grasslands would burn and that deposits maybe 1, 2% carbon as pyrogenic carbon. And you do this, this happens for thousands and thousands of years, you end up with the best soil in the world. So biochar is fundamentally recreating that process and reintroducing fire to our agricultural soils.
Cody Simms (20:08):
I grew up in Kansas and farmers there still burn their fields. I assume that biochar is creating a more pure version of just openly burning the field again, because of that oxygen starvation that you talk about.
Jason Aramburu (20:20):
Exactly, exactly. Yeah. An open burn returns maybe 1 or 2% of the biomass carbon as pyrogenic carbon. Biochar production, it's more like 50% or higher depending on your process. So yeah, it's really just super charging that natural process.
Cody Simms (20:36):
And how does other soil-based climate solutions, like enhanced rock weathering with the salt rock being spread on soils, does that play positively with biochar? Would a farmer eventually want to practice both nature-based practices for their soils?
Jason Aramburu (20:52):
Yeah, so they're certainly not mutually exclusive. You can do both. There's no reason you can't, and there's no reason you shouldn't. I think there is a geographic aspect to it with ERW, your economics fundamentally depend on how close you are to the quarry or to the supply of material because it's heavy stuff. I think also what I have seen in the latest literature is there is a lot of evidence that ERW has an agronomic impact in tropical soils, which are highly weathered, highly acidic. The results so far are inconclusive regarding temperate soils, which represents the United States, North America. So I think at this point it's unclear if there's an agronomic benefit to doing that in commercial soils, but they're certainly not mutually exclusive.
Jason Aramburu (21:37):
I think the one thing to be mindful of in ag, farmers are very concerned about soil compaction. And that's part of the reason that we have taken this infield in situ approach. Every time you pass a heavy piece of equipment over soil, farmers see that as depreciation of their asset, because it is compacting the soil, and that does have a direct impact on yields. So I think that's something that is important to be mindful of. Maybe there's a way to combine the two techniques to minimize passes. I don't know, but I think that's the main thing to be thoughtful of with those types of technologies.
Cody Simms (22:12):
We're going to take a short break right now. So our partner, Yin can share more about the MCJ membership option.
Yin (22:19):
Hey folks, Yin here, a partner at MCJ Collective. Want to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer to peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have since then grown to 2,000 members globally. Each week, we're inspired by people who join with differing backgrounds and perspectives. And while those perspectives are different, what we all share in common is a deep curiosity to learn and bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community. A number of founding teams have met, nonprofits have been established, a bunch of hiring has been done, many early stage investments have been made, as well as ongoing events and programming like monthly Women in Climate meetups, idea jam sessions for early stage founders, climate book club, art workshops, and more. So whether you've been in climate for a while, or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (23:21):
All right, back to the show.
Cody Simms (23:24):
And before we dive deep into your business and the products that you're building, maybe just give us the history of biochar in ag, not like the ancient history of using it in the Amazon rainforest, but in the US, in current industrial ag forms. You mentioned there have been some economic challenges in that it's attempted to be made in these large scale pyrolysis plants. Is it used today? Where is it used? And what does that business look like right now? Obviously you're out there trying to disrupt it and prove that there's a better way of doing it, but I'm curious what the state of biochar looks like today.
Jason Aramburu (24:02):
Yeah. So I would say the modern resurgence of biochar, it's been probably 15 to 20 years that it's been getting a lot of interest. And one thing that surprised me the other day, there have literally been over 20,000 peer reviewed studies on biochar in that timeframe, which I think makes it one, if not the most studied CDR technology ever, which is really fascinating. And I would say in terms of the industry it's primarily produced today in repurposed bio energy plants. So there are, I think between 30 and 60 plants in the US designed to produce bio energy from wood chips or from wood pellets. And oftentimes they're located near a lumber operation or forestry operation or something like that. And you do get as a byproduct of that process, pyrogenic carbon, you get biochar out as a byproduct and that's the primary source of biochar production today. There are a handful-
Cody Simms (25:06):
So these are utility scale power plants that are just because they're located near a heavy bio waste producing facility, they're actually using biomass as the energy source?
Jason Aramburu (25:18):
Correct, correct. And there's a handful of companies building dedicated systems for making biochar, typically medium scale, on the scale of a few tons per day, 10 tons per day. But the bulk of the supply in the US either comes from those facilities or it's imported from other countries. And generally the price floor in the US for cost of goods, so at the plant is like 3 to $400 a ton because it's still quite expensive. You still have to procure those feed stocks and transport them to the plant.
Jason Aramburu (25:57):
But then the challenge becomes you have to get the biochar out into the field as well. And these bioenergy plants are not necessarily located in Nebraska either. And so when you take into account all of the costs that are associated with transporting that material and logistics and everything, it really drives up the cost. And then you factor in other aspects like packaging the material and spreading it and preparing it. And when it finally gets to the farmer, the farmer all in, once they have biochar in the ground, it's anywhere from 600 to $1,000 a ton, all in to the farmer. And as a result, it's primarily used in high value crops where they can support that kind of price.
Cody Simms (26:47):
And 600 to $1,000 a ton, how does that compare to a basic soil amendment, like liming the soil, as an example?
Jason Aramburu (26:54):
Liming, you are typically spending, here in Texas, a farmer might spend 75 to $100 per acre for a ton of line, including delivery and spreading.
Cody Simms (27:05):
So 10 X more expensive give or take.
Jason Aramburu (27:07):
Yeah, yeah. Exactly, exactly. So that really presents a challenge because ag is notoriously conservative, slow to adopt new practices and new technologies. And it just really presents a conundrum because you got to get the material out there, and right now, the only way to do that is trucking it into the field. And so in my view, that's really limited adoption of biochar technology. It has to make economic sense at the end of the day.
Cody Simms (27:36):
So talk to us about what you're building. Maybe start with an actual physical description of the machines that you are creating, because we don't have visuals in front of us, we're listening, just to help us understand what this looks like.
Jason Aramburu (27:52):
Sure. So what we set out to create at Climate Robotics is the world's first infield continuous pyrolysis system. We realized that the economics of centralized production are challenging, but even the economics of distributed production become challenging. So if you were to set up a plant in Iowa, or even at the edge of a farm, you're still paying quite a bit to harvest material, transport it, process it, get it back out into the field. And it results in multiple passes over the soil with heavy equipment. And I mentioned before, that's really a barrier to a lot of farmers. Soil compaction is really a barrier.
Jason Aramburu (28:36):
So for us, the goal was this really needs to operate like a grazer. It needs to run in the field. And so what we've built is an implement that attaches to the back of a standard agricultural tractor. So think your big green tractor. We have a system that's mounted onto the chassis of a grain cart. So it attaches to the back of the tractor and it's pulled by the tractor. It is a heavy industrial machine. It's a series of tubes and conveyors that move material through this process.
Jason Aramburu (29:10):
And what it fundamentally does, the tractor has an implement on the front end called a forage harvester. And that's an off-the-shelf agricultural implement that is used to harvest material, to harvest waste biomass from the field. So after the combine passes over the field and leaves all this refuse on the ground, we come in with our system and scoop it up. So the harvester scoops up that material conveys it to our pyrolyzer and our pyrolyzer processes that material down to size. So the first step is there's actually a biomass chopping mechanism on board. And then the chopped material is conveyed into our reactor and the reactor is what actually produces the biochar.
Jason Aramburu (29:57):
So the system, it's a continuous flow reactor. It continuously converts the raw biomass into biochar. And then on the back end of the trailer of the grain cart, that's where we actually deposit the biochar back into the soil. We use an off-the-shelf tilling implement called a discer or discing harrow, which it looks like a series of toothed wheels that are towed behind the system. That then mixes the biochar in with the top 10 centimeters of the soil. So it fundamentally looks like another piece of agricultural equipment that you would find on a farm, but instead of tilling or planting, it's producing biochar.
Cody Simms (30:37):
And after the normal harvesting, when you have this just waste biomass laying on the field, what would be the typical pass over that the farmer would do with a tractor in between then and the next time they're readying the field for planting?
Jason Aramburu (30:51):
So for us, we typically come in one to two weeks after the crop has been harvested because we like to let the residue dry out a little bit. That makes the process more efficient. At that point, generally the field is left fallow until they're going to get ready for planting the next cycle. So the reality is most farmers aren't doing much with this residue. They're either just letting it break down. Sometimes many of them will conduct a light till, or sometimes a full inversion till where they actually mix it in. So in many cases we're replacing a light till or a full inversion till, but really not much happens during that time otherwise. The soil is just left to lie fallow and regenerate until planting for the next season.
Cody Simms (31:34):
Got it. And so just to make sure I can spit back what I heard you say, farmer has a regular old tractor. The front of the tractor has an implement that they already have on the front of the tractor, which is scooping up the stalks and leftover residue from harvesting. It's got some kind of shoot that shoots it over the tractor into a big container that the tractor's hauling. That container chops this stuff up, pyrolyzes it, burns it, converts it to biochar and then spits it out the back end where you have these little disc wheels that basically till it into the soil and mix it in with the existing soil.
Jason Aramburu (32:11):
Exactly right. Yep, exactly.
Cody Simms (32:14):
Looking on your website, there are parts of the process where you tout that you have autonomous components to what you do. Maybe explain how autonomy fits into the overall model here also.
Jason Aramburu (32:25):
So there's two aspects to the autonomy. One, well, the fundamental goal of autonomy is labor reduction at the end of the day. So on the one side, we use process control and software to automate the pyrolysis process itself because the reality is it's not trivial to convert agricultural residues into anything. The reason farmers don't do much with them is because they're hard to work with.
Jason Aramburu (32:49):
So we have a lot of process control logic and automation in the pyrolyzer itself because the feed stock is not homogenous. The consistency changes. The composition changes. We have to adjust the pyrolysis process in real time in response to that. So we leverage automation on the pyrolyzer itself, first of all, to produce a consistent product that meets spec from this bulk agricultural residue feed stock.
Jason Aramburu (33:14):
The other aspect to automation is actually operating the tractor and the navigation. So our goal over time is to make this process fully autonomous and fully hands off, because we believe that to get the best economics, humans shouldn't be driving this system. If we really want to drive down the cost of sequestration, we have to do everything we can.
Jason Aramburu (33:35):
And tractor automation is pretty mature these days. You can buy a kit today, a retrofit kit for a tractor to make it semi autonomous at this point. A lot of combines now have actually autonomous grain bins running side by side with them. That's all based on GPS and various sensors in the tractor. So that technology is fairly mature and it's getting better over time.
Jason Aramburu (34:01):
Our business plan and our strategy is to increasingly leverage automation to make this completely hands off so that instead of having an operator in the cab of the tractor, we can have a safety operator with a tablet in the field, managing a fleet of these. And that's how we get to scale. That's how we get to service 10,000, 20,000 acre commercial farms.
Cody Simms (34:23):
It sounds like that last piece isn't necessarily a biochar problem though, that's just an agricultural machinery problem that is-
Jason Aramburu (34:30):
Yeah, exactly.
Cody Simms (34:31):
... being advanced across the industry. Are you actually making the tractors themselves today, or are farmers using their own tractors and using you as an implement on the tractors?
Jason Aramburu (34:40):
Today, we have our own tractor. I mean, we didn't build it, but we have an off-the-shelf tractor that we modify for this application and an off-the-shelf harvesting implement. So today we own and operate all of our equipment. Over time, yeah-
Cody Simms (34:53):
Oh, you even operate it today?
Jason Aramburu (34:54):
We do. Yeah, exactly.
Cody Simms (34:55):
So this isn't like, I've got a barn that I've got my tractor in and I remove my harvester and plug in my biochar. This is actually a separate, entire end-to-end machine that I'm driving.
Jason Aramburu (35:07):
Not yet I would say. If you look at a commodity like lime, most farmers, particularly farms at around the median size in the US, which is 1,000 acres, they don't own a lime spreader. They use lime almost every season, but they don't own a lime spreader because it's something you might use once a year. So generally they're contracting that service to either a co-op or a retailer in their region who then comes and offers that as a service.
Jason Aramburu (35:34):
So this is pretty common. And oftentimes it's not something people are familiar with outside of the ag industry, but this is a pretty common model. Over time, as we evolve the equipment, make it more user friendly, there may be an opportunity to either sell these systems directly to large farms or what I think makes more sense is selling or leasing them to the co-ops and the retailers who already provide these services to farmers.
Cody Simms (36:00):
Got it. So for now the business model is truly biochar as a service. I assume they pay you a negotiated amount or a contracted amount for the amount of acreage they have and you show up with your machines, do the work and drive away.
Jason Aramburu (36:15):
Yeah. So today actually, because there is so much excitement in the carbon removal market, we are able to leverage those markets and the carbon credits we generate to really get to scale fast. One of the big reasons agriculture is challenging to crack is that farmers are super conservative and they're really slow to adopt new solutions. And we've been able to short circuit that really by leveraging carbon finance. So we can cover the cost of our operations through the price of CO2 today and through the credits we generate. And we can even share some of that revenue with the farmer. And so that really makes it attractive to the farmer.
Jason Aramburu (36:54):
Now over time, yes, we know we're delivering agronomic value to the farmer and we intend to monetize them just like lime, just like all other inputs that they're using, but for now, given the high price of carbon, it's really given us an opportunity to get to scale very, very quickly, faster than you could with an input that has no carbon benefit.
Cody Simms (37:16):
So to a farmer, are you cheaper than you mentioned these liming services that show up and do soil amendments? Are you cheaper than that for them? Is your business model that you would actually replace that for them in the near term?
Jason Aramburu (37:31):
Exactly. At scale, we can be cost competitive or cheaper than chemical alternatives. We're not there yet. I mean, we're still at a relatively small scale, but we have a path to do that. And thanks to the carbon markets as they are, we're able to get to scale quickly.
Cody Simms (37:49):
To some extent with the carbon markets, is there a proven buying model for biochar? Is it biochar as a product or is it actual based on soil sequestration and permanence on the per acre basis that you're able to sell as a credit?
Jason Aramburu (38:04):
So today there are several established methodologies. Actually both, there's some that are active and there's some that are in development for soil-based carbon sequestration with biochar. They're all fundamentally the same. They're actually all based on the standard for which Morgan, my co-founder was a co-author. So the core concept is you test the biochar to measure its stability in the soil. Effectively, what you're measuring is how cooked it is, and you have to meet a minimum spec in that regard to ensure that enough of the carbon will stay sequestered over the desired length of time. And so you do that, and then you also have to have your pyrolysis equipment tested. You have to run an LCA, a life cycle carbon analysis on your equipment to determine what the emissions associated with your process are. Once you have all that data, the methodologies have an equation, you plug all the information in, and you determine a net carbon sequestration for each ton of biochar that you apply to the soil.
Cody Simms (39:08):
And all of those costs, both of the measurement and verification, as well as the equipment testing are baked into the total unit economics then that you're-
Jason Aramburu (39:18):
Exactly.
Cody Simms (39:19):
You don't quote a price, but you said can get to the point of being cost comparable with an existing soil amendment. So-
Jason Aramburu (39:25):
Exactly, yeah. That's all baked in. And one of the great things about biochar from the MRV perspective is it's pretty lightweight, honestly. A challenge with a lot of soil, carbon and forestry carbon solutions is you have to go every year and monitor them to make sure the carbon is still there. Biochar because it is considered stable in the soil, once you've had your char tested, once you've verified the tonnage that you put in the ground, the methodology is, consider it, it's done, it's there.
Cody Simms (39:54):
So the farmers aren't having to sign some kind of affidavit that they're not going to do something for the next-
Jason Aramburu (39:58):
Exactly.
Cody Simms (39:59):
... N number of years or anything. It doesn't really matter.
Jason Aramburu (40:01):
Exactly. And that's a big problem in farming. We've talked to a lot of farmers who've done no till for instance, or they've done rotational grazing or cover cropping, which it requires the farmer to do a lot of work. And in many cases they said they did the work and they didn't end up getting paid because at the end of the day, the MRV cost was higher than the cost of the carbon credit and the farmer just ended up with nothing. So it's a big challenge. It's a big challenge, but I think biochar really, it makes a lot more sense in that regard.
Cody Simms (40:31):
And you talked a little bit about this a few minutes ago, but I want to come back to the complexities of both the inputs and the complexities of the terrain, which I assume both are big factors in your machine. You're trying to build an autonomous system that can move this material up over the tractor, chop it up, turn it into appropriate biochar and put it in the ground. I assume, dealing with a corn stalk versus soybean residue is quite different. I assume working on farmland versus ranch land terrain in Western Kansas versus terrain in California is quite different, et cetera. How do these factor in, and are you trying to approach a very specific market to start and scale out from there? Or are you trying to be able to solve all of these things at once?
Jason Aramburu (41:22):
Yeah. I mean, you can't solve everything at once. The good thing about it is, so we've tested all those feed stocks you mentioned and they all work well. What really is unique is you have to modify your pre-processing depending on the feed stock. So the actual harvesting implement, there's some slight modifications, depending on what you're harvesting. And then the actual biomass chopping and processing is feed stock specific, but those are solved problems in agriculture already. Now the beauty of commercial ag is that you're not generally growing three different crops on the same acre. It's pretty much mono cropping. So that makes our job a little bit easier. In terms of where we're focusing, we mainly focus on corn and also rice straw to start because those are some of the most abundant producers of waste, of residues. And they work very well with off-the-shelf harvesting equipment.
Cody Simms (42:14):
And presumably, if you're the ones owning and operating these, you're also taking a geographic-focused approach to start because of the logistics involved.
Jason Aramburu (42:21):
Yeah, so far all of our projects have been in Texas and Arkansas mainly just, that's where we're based, but our equipment's mobile. You can tow this on any state road with a standard F-350 pickup truck. So our vision is ultimately that over time, these can follow the harvest because in Texas, they'll start harvesting their corn several months before Nebraska or the Dakotas will start harvesting their corn. So there really is the opportunity to maximize utility of the equipment by moving north. And again, that's something that already happens in agriculture. Agricultural equipment is very expensive. Farmers and owners of that equipment are always looking to maximize utility.
Cody Simms (43:03):
I'm skipping around a little bit, but as a credit, we talked about the permanency already. You said, hey, look, look down in the Amazon, you dig up soil, that's had biochar burned into it 1,000 years ago and it's still there. So it feels like permanency, the factor is high. The additionality factor I assume is high today. If it becomes cheaper than soil amendments, that may become a question over time. And then I'm curious how you view cost just relative to other sequestration methods from a pure credit perspective. So almost regardless of the farmer being involved, as just another methodology that we can use to sequester CO2, how do you view costs scaling on a per ton basis?
Jason Aramburu (43:45):
Well, our price target for a ton of CO2 is that we believe over time, a ton of CO2, the price will probably converge at around 50 bucks for high permanent solutions, so 100 years or more. The price is probably going to converge to 50 bucks. I don't think the environment of $600 a ton CO2 is sustainable long term and I don't think anybody does. I've talked to the heads of carbon and sustainability at many, many of the largest corporations in the world. And they've said point blank, "Yeah, if it's 50 bucks a ton, we can probably do it. If it's more, our business won't work." And I think we have to be realistic about that. So that's the target. We have a path and line of sight to deliver tonnage at a cost below that. So we believe we can operate profitably if carbon revenue is our only revenue source at scale.
Jason Aramburu (44:39):
And I think that's something that a lot of other technologies are going to struggle with because they're fundamentally depending on either massive scale up of very low cost, renewable energy, or some massive change in the cost of logistics, transportation, or something else. They're depending on a step change, technological innovation that someone else is developing. We're not, we don't depend on that. And in fact, we're even able to operate at the very high fuel prices we're seeing right now, which hopefully are an anomaly. So yes, we do have line of sight to operate exclusively off of the carbon revenue. Now, long term, we are very optimistic that we can also generate revenue from the agronomic benefits of biochar. And to the point of additionality, I think if we get to a point where we can build a billion dollar business off of the agronomic benefit alone, that's a great problem to have.
Cody Simms (45:34):
And I guess obviously there's a dependency on building the business based on carbon credits that the actual methodology gets fully adopted and traded in the market, which it sounds like there's progress being made on, but we're not quite there yet. Is that correct?
Jason Aramburu (45:48):
Yeah. So there are active methodologies and we are selling our credits. We sell to some of the biggest corporations in the world actually, and we have long-term offtake agreements as well. So that's already there and there's actually two methodologies being developed, one by Verra, one by Climate Action Reserve, which are the two big certifying bodies currently. So there's a lot of enthusiasm around this and I think people are really waking up to the fact that biochar, it really is a very reasonably priced option for sequestering carbon.
Cody Simms (46:22):
I mean, I guess at scale it sounds like you view yourselves as a carbon credit company, most likely, but that you have the opportunity to be a biochar sales business in the future, if you want to.
Jason Aramburu (46:37):
Yeah. Yeah, I think ultimately we will have blended revenue streams. We'll do both over time. I think that puts us in the best position, but it also gives us tremendous optionality because nobody knows how carbon markets are going to evolve. I think we're definitely encouraged. We see tailwinds that the Inflation Reduction Act allocated 20 billion for carbon or climate smart ag, for instance, of which biochar is a technique. So we definitely see tailwinds out there and we see the biochar industry is so different from where it was 15 years ago, but that's a no one knows. I mean, you can't really predict how markets are going to evolve and that's why we really focused on the dual value stream and maintaining optionality there.
Cody Simms (47:23):
And you mentioned a few offtake agreements that you have. Maybe give us some sense of where you are today from a deployment traction perspective, the number of tons you're sequestering right now and what the commercial traction of the business looks like to the extent you can share.
Jason Aramburu (47:40):
Yeah, well, what's public is we completed our first year of deliveries with Microsoft, who's actually one of the largest buyers of both carbon credits broadly and biochar credits. So we delivered 1,000 tons of CO2 to Microsoft. We completed that delivery in June of this year. And I can't say what is next, only that we're really happy and really excited about what is coming next, I guess, is all I can say at this point.
Cody Simms (48:08):
And how have you financed the business to date?
Jason Aramburu (48:10):
So we finance it, I mean, we're generating revenue, first of all. So we generate revenue from the sale of the credits and then we've also raised grant funding and then have some private investors as well.
Cody Simms (48:25):
You have a very CapEx heavy business, you're building agricultural machinery. Do you expect over time to figure out some project financing based solutions for funding the ongoing build out of your machinery?
Jason Aramburu (48:36):
Absolutely. Now that we're getting long-term purchase agreements and offtake agreements in place, we can capitalize those with debt, just like any other piece of industrial equipment. So yes, we absolutely do intend to capitalize the scale up of the equipment with debt now. What is potentially really exciting is ag is unique in the US. If you go buy a green or a red tractor, big green or big red tractor, because the USDA recognizes the importance of that equipment to the ag industry, they actually guarantee those loans. So you are able to get generally a loan with 0% interest for that type of ag equipment backed by USDA. And there's a number of banks that will finance that. And so our hope is that over time as the agronomic value of biochar is more known, and as broadly this climate smart agriculture concept takes off, maybe we could do the same with pyrolysis equipment or biochar production equipment. So that's our long-term hope, and we're doing everything we can to raise awareness of this technology with folks in Washington, et cetera.
Cody Simms (49:45):
And you're pioneering a lot of this right now, particularly the infield grazer model, but at the end of the day, it's mechanical equipment. If it works, I would expect there will be other players in the mechanical equipment ag space that try to do similar things. How do you view that from a competitive moat perspective?
Jason Aramburu (50:04):
Yeah. Well, first of all, we've been very aggressive at filing patents. Morgan and I have been in the technology industry long enough. We know how important they are. So we filed our first provisionals before we talked to anyone about this company. And those claims were recently allowed by the patent office. And we filed it several years ago. It takes a while to work through the patent office, but our core foundational patent will now be issued as a matter of course, and we're really excited about that.
Jason Aramburu (50:31):
And that really protects our core innovation of a mobile continuous pyrolysis system. It also protects, it's not just mobile biochar production, it's really all aspects of pyrolysis in field, continuous pyrolysis. So we believe that, that really protects the foundational IP of the company, and we continue to be very aggressive in filing patents. So I think that's one aspect of defensibility that's very important, and we filed international protection as well.
Jason Aramburu (50:58):
The second aspect is really it's nontrivial to do this also. Like I said before, pyrolyzing ag waste, even in a stationary system is hard. On our team, our founding team, we have over 45 years of experience building these systems. Our CTO, Dan has his PhD in mechanical engineering. He's also a veteran of the biochar industry and he's been building pyrolysis equipment for 15 years. So to replicate this, you would need to clone us. There just aren't that many people that know how to build these systems and operate them at scale.
Jason Aramburu (51:34):
There's also really a data moat that we're building, because again, it's non-trivial to produce char to a particular spec from these mixed feed stocks. And as we get more and more hours with the equipment, we just improve that model and we improve our process model and our reliability. So I think if a competitor did decide to say, "Okay, you know what? We're going to infringe, we're just going to do it," it would still take them a long time to get where we've been and to replicate our expertise. And then I guess the last thing is just the relationships. There's a limited number of farmers in this country and in the world, and there's a limited number of buyers of these credits, and we're really working aggressively to build those relationships and build them long term as well.
Cody Simms (52:19):
Jason, thank you so much. What didn't I ask that I should have asked for clarification on?
Jason Aramburu (52:24):
Well yeah, I think I don't know. I think one question that I get a lot with biochar is, what is the actual permanence? How long is the carbon there? And I had someone say to me recently, isn't biochar controversial? And I reflected on that comment a lot, and at the end of the day, I was like, what do you really mean? I mean, that's what led me to realize there have been over 20,000 peer reviewed studies on biochar and I looked up other CDR technologies, most have zero. And I said, "Well, surely there's some correlation between peer review and how vetted a technology is."
Jason Aramburu (53:06):
So I think it's really interesting. I think one of the things that a lot of people struggle with, with biochar is it's a very intuitive solution. Part of I think indigenous knowledge is it's often based on intuition first and it's sometimes hard to grok in our world today the value of intuition and the value of that wisdom. But at the end of the day, I mean, it really is probably the most thoroughly studied CDR solution that we have. And I do think that's incredibly important because when we talk about scaling this stuff up, any of these technologies and investing billions of dollars in it, you got to be sure it's going to work and you got to be sure it's going to scale. And I think that's really an asset to biochar.
Jason Aramburu (53:51):
And then yeah, on the permanent side, what we know is that the current methodologies require a permanence of at least 100 years. So you have to deliver at, or above that spec. And we're now at a point where it's been studied so long that there are seven and 10 year field trials available now. I mean, that's something that you can't recreate that except by doing it. And what we're seeing based on those studies, what I think is most interesting are there's actually a lot of papers where they use radio isotopes of carbon to label the biochar, and then they can track how that carbon moves through the ecosystem over decades. And so far, those papers are showing actually around 4,000 years of permanence, which squares with what we see in the archeological record as well.
Jason Aramburu (54:39):
So I do think over the next five years, we're going to really unlock a lot of data showing that what everybody thinks is true, that biochar really is permanent for millennia in the soil. And it's really important because we're going to have thousands of studies backing that, and we're going to have data that really supports that. So I think the biochar train is getting a lot of steam suffice to say.
Cody Simms (55:03):
Well then for those who want to jump on the train, Jason, where do you need help right now?
Jason Aramburu (55:07):
Everywhere. I would say that the main areas right now, software controls and electrical engineering, anybody who wants to work on automation or process controls. And then also we're starting to hire on the business side, both selling the carbon credits and building the relationships with farmers and recruiting farmers. So anyone who wants to get involved there who maybe has less of the engineering technical background, that's where we're really starting to scale up also.
Cody Simms (55:35):
Jason, I so appreciate you joining us today, sharing more about what you're building.
Jason Aramburu (55:37):
Thank you, Cody. This was great.
Cody Simms (55:39):
And I learned a ton.
Jason Aramburu (55:39):
Great. Really appreciate it.
Jason Jacobs (55:42):
Thanks again for joining us on the My Climate Journey podcast.
Cody Simms (55:45):
At MCJ Collective, we're all about powering collective innovation for climate solutions, by breaking down silos and unleashing problem solving capacity. To do this, we focus on three main pillars, content like this podcast and our weekly newsletter, capital to fund companies that are working to address climate change, and our member community to bring people together as Yin described earlier.
Jason Jacobs (56:07):
If you'd like to learn more about MCJ Collective, visit us at www.mcjcollective.com. And if you have guest suggestions, feel free to let us know on Twitter, @mcjpod.
Cody Simms (56:22):
Thanks and see you next episode.
